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We investigate whether board-interlocked firms via an audit committee (AC) board member exhibit correlated non-audit service (NAS) purchases, and whether financial reporting quality and future firm performance vary with the amount of correlated NAS purchases from the AC interlock. We find that AC interlocked firms have positively correlated total NAS and three NAS subtypes—Tax, Assurance, and Other—in the overall sample period from 2000 to 2016, and in each of the subperiods pre- and post-SOX (Sarbanes–Oxley Act). Firms with a larger NAS component that is explained by the AC interlock tend to exhibit lower financial reporting quality. We also find evidence that firms with higher AC interlocked NAS purchases are associated with lower future performance, although this association exists only in the pre-SOX period. Overall, the evidence suggests that greater NAS purchases among AC interlocked firms can have a detrimental effect on financial reporting quality and auditor independence. While these detrimental effects are concentrated in the pre-SOX period when there were less restrictions on NAS purchases, we find some evidence that the association with lower financial reporting quality persists in the post-SOX period. [ABSTRACT FROM AUTHOR]

Capitalizing on a unique setting in China where auditors disclose their prosocial activities, we examine the role that auditor social responsibility plays in shaping their performance. In one direction, behavior consistency theory implies that individual auditors exhibiting more social commitment in their off-the-job activities behave similarly during engagements, enhancing the quality of their audits. In the other direction, accounting firms' internal structures along with external disciplinary forces mute the impact of heterogeneous auditor characteristics on their performance. In a staggered difference-in-differences design, we report a significant fall in the magnitude of companies' discretionary accruals and the incidence of financial reporting irregularities after their auditors begin contributing to social welfare, relative to companies whose auditors refrain from contributing during the same timeframe. Additional evidence implies that the higher audit quality stems from auditors better protecting their independence and improving their competence in the post-contribution period. Collectively, our results provide insights into the importance of auditors' prosocial attitudes to their external monitoring. [ABSTRACT FROM AUTHOR]

Purpose: Auditors are a profession that plays a crucial role in assessing the fairness of financial reports and producing quality reports. This research aims to examine the factors that influence audit quality using a literature review. Method: This research was conducted using the literature review method by collecting theories and previous research results relevant to the theme raised. Results: The results of this research show that empirical research reveals the importance of auditor ethics, auditor competence, auditor independence, and audit fees in maintaining the quality of audit results. The determinants of audit quality are expected to be the auditor's attention so that in the future they can work with more responsibility, objectivity, and honesty in every action and decision. Implications: The implications of this research are expected to be taken into consideration in the formulation of policies related to improving audit quality so that the output of audit results is truly in accordance with the provisions, professional code of ethics of public accountants, and represents the real situation. Novelty: This research is different with the previous research, what will be discussed in this research is the role of ethics, competence, independence, also audit fees in improving the quality of audits. The selected factors have not been combined by previous researchers.

Penelitian ini menguji dampak independensi, pengalaman, etika, dan keterlibatan auditor terhadap kualitas audit, membahas peran auditor dalam memitigasi konflik yang timbul dari kekurangan informasi dalam laporan keuangan. Dilakukan di Kota Surabaya dengan 158 auditor dari Kantor Akuntan Publik, penelitian ini menggunakan penelitian eksplanatori dan metodologi kuantitatif. Dengan menggunakan purposive sampling dan pengumpulan data berbasis kuesioner, analisis regresi linier berganda dilakukan untuk menguji hipotesis. Hasil penelitian menunjukkan bahwa independensi dan etika auditor berpengaruh positif terhadap kualitas audit, sedangkan pengalaman dan keterlibatan auditor berpengaruh negatif. Selain itu, secara kolektif, variabel-variabel ini berkontribusi signifikan terhadap kualitas audit .

Financial corruption crimes in the public sector are prevalent in numerous developing nations, frequently stemming from political, economic, or social problems, among other things. In order to combat these unethical behaviours in the public sector, governments are aggressively striving to improve the internal audit function. This requires recruiting an adequate number of auditors who can carry out their duties with the highest level of professionalism, fostering the autonomy of the audit function and auditors, and improving the effectiveness of auditors through training, qualifications, and education. In the end, this will help decrease the financial corruption that hinders the long-term progress of Iraq. The goal of this study is to assess the magnitude, autonomy, and expertise of internal auditing in Iraq's public sector entities, as well as the extent of financial corruption within this sector. To accomplish the goals of the study, we created a survey and administered it to a randomly selected group of internal auditors in 15 Iraqi governorates, excluding the Kurdistan Region. We issued a total of 174 questionnaires, each containing two axes. The initial segment has three facets of internal auditing (magnitude, autonomy, and expertise) and a total of 27 inquiries. The second axis consisted of 14 questions that assessed financial corruption using regression analysis. The study used basic and numerous linear tests to investigate the hypotheses, ultimately determining that the inclusion of more staff was essential for carrying out certain audit responsibilities. The department lacks a proportional allocation of internal auditors compared to the workload, resulting in the audit body's weak independence. This is primarily due to the administration's interference in the transfer and employment of individuals based on its own discretion, as well as corruption prevalent in government units, particularly in investment spending. The results also revealed a direct relationship between size, independence, internal auditing experience, and financial corruption. [ABSTRACT FROM AUTHOR]

Global scandals and the collapse of major entities without any prior warning have undermined stakeholder confidence in the auditing profession and have shown that users of financial statements may have different opinions on the auditors’ responsibilities, highlighting the audit expectation gap. The present study aims to identify the existence of an audit expectation gap and its components in an emerging country, namely Morocco. For this purpose, a structured questionnaire based on a five-point Likert scale was randomly administered to 152 respondents, including auditors, investors, managers, bankers, and academics. The study explores the audit expectation gap under several components, such as the auditor’s general responsibilities, auditor’s independence, his/her responsibility to prevent and detect fraud, his/her responsibility in assessing internal control, his/her responsibility in assessing the going concern assumption and audit report. The results of this paper show evidence of the audit expectation gap in Morocco in the studied components, except the audit report. The results of the study encourage public decision-makers and professional audit bodies in Morocco to adopt an expanded audit report containing more information on the audit mission and auditors’ and management’s responsibilities. On the other hand, training and education sessions on the nature and functions of auditing should be provided on an ongoing basis to the various users of audit reports.

Audit quality is one of the most important concerns of audit firms, statutory audit regulators and academia. The purpose of this study is to analyze and evaluate the influence of auditor independence indicators on the quality of services provided. Based on the data available in the Audit Analytics database, a sample of 31 companies listed on the Bucharest Stock Exchange was selected, for which 124 observations were reported during four consecutive years. The results of the quantitative analysis performed demonstrated the existence of a significant and positive correlation between the variables that measure auditor independence, such as the provision of non-audit services, financial independence, Big 4 membership and turnover and the dependent variable - the quality of audit services.

Auditors fulfill a crucial societal role by increasing the credibility of financial reports, which requires that appropriate audit quality be provided and auditors are factually independent and perceived as such. So far, regulators and researchers have focused on a few measures for improving independence, namely the prohibition of non-audit services (NAS), audit firm and audit partner rotation, and joint audits. Despite these regulatory initiatives, accounting scandals still happen, and the independence of the auditors involved is questioned. Therefore, this explorative study aims to identify alternative measures that may strengthen auditor independence. Non-professional investors and auditors participated in a survey to identify promising independenceenhancing measures. Surprisingly, not only non-professional investors but also auditors support the implementation of many instruments. Non-professional investors rate measures related to oversight, controls, and sanctions as particularly useful. Likewise, auditors perceive measures for oversight and control as helpful but rank most sanctions lower than non-professional investors. They also support a stricter civil liability and rank some direct independenceimproving measures as highly useful. Overall, the participants perceive a greater need for improving the independence of public interest entity (PIE) auditors. This explorative study widens the research horizon by adding alternative measures for improving independence in appearance. Thus, researchers may identify promising avenues for future research. Also, the paper is of interest to regulators and potentially helps in setting independence standards. Auditors and audit committees can identify opportunities for taking voluntary actions to ensure factual and perceived auditor independence. [ABSTRACT FROM AUTHOR]

Companies' earnings are arguably their most important financial disclosure, and corporate tactics to manage earnings can be directly constrained by audit procedures. In this article, we examine whether there is a link between companies' earnings performance and changes in the accounting firm they choose to audit their financial statements. We find that when companies' reported earnings just miss analysts' expectations, they are more likely to change their auditor. Consistent with an opportunistic auditor switch, we also find that these companies have lower levels of earnings quality after the change. Our results concentrate on companies with more incentive or ability to act opportunistically, including those with negative market reactions to earnings, higher levels of accruals flexibility, and weaker corporate governance. Our study advances research into the public's interest by providing evidence of suspect auditor changes that increase auditors' ethical conflict to maintain independence and objectivity. [ABSTRACT FROM AUTHOR]

This study investigates the correlation between auditors' acceptance of gifts and discounts (AGD) and the potential undermining of auditor independence, akin to bribery. Bribery usually encompasses the exchange of valuable items, such as money, gifts, or favors, in return for influence or favors. Both "gifts" and "discounts" have the potential to constitute bribery, depending on the circumstances. Therefore, in specific contexts, the giving or receiving of gifts and discounts might be viewed as bribery if their intention is to unduly influence someone's actions or decisions. This study comprises a final sample of 62 audit firms in Saudi Arabia. The simple regression results highlight a significant negative correlation between auditors' perceptions of accepting gifts and discounts, and their independence. The act of receiving gifts and benefits establishes a close tie between auditors and their clients, influencing auditors' behavior. The study suggests that the higher the value of a gift or benefit, the more pronounced the threat to auditor independence. Furthermore, even minimal gift and discount arrangements have a significant impact on auditor independence. The insights gained from this study can be of substantial value to the accounting and auditing professions, audit firms, standards setters, and auditing regulators, fostering a deeper understanding of the degree to which gifts and discounts affect auditor independence. [ABSTRACT FROM AUTHOR]

There is an ongoing debate among regulators and researchers about concerns that the provision of non‐audit services (NAS) to audit clients may impair audit quality by reduced independence. In this context, there can be different perspectives on audit quality. Given recent regulatory changes in the European Union (EU) aimed to improve investor confidence in audited financial statements, it is critical to understand the association of NAS and audit quality perceptions by investors before and after the regulation. We investigate whether NAS affect shareholder and lender perceptions of audit quality, measured by the cost of debt and equity capital. For a sample of German firms, we find significant positive associations of NAS with both cost of debt and cost of equity. Other assurance and consultancy services drive this effect. We do not find this effect in the pre‐regulation period, but in the transition period when the regulation was passed but NAS restriction did not yet apply. In the post‐regulation period, it only persists for lenders. Thus, the EU regulation may have increased (or inadequately created) independence concerns for shareholders and lenders and curbed these concerns for shareholders only. [ABSTRACT FROM AUTHOR]

Audits are essential because of the separation of ownership and control in modern economies. Shareholders or owners delegate resources to management in order to enhance their wealth under this arrangement. Therefore, they want the agents to provide authentic, precise, and impeccable reports. Therefore, research evaluated the effect of auditor independence on the performance and the moderating effect of firm size on the relationship between auditor independence and the performance of deposit-taking SACCOs in Kenya. The study was based on Agency theory. The study used a descriptive survey research technique. The study used primary data collected using structured questionnaire. A sample size of 223 was selected by a simple random sampling method from a target of 504. Descriptive and inferential statistics were used to examine the data using the SPSS 26 software. The R2 of 0.512 suggests that 51.2% of the variability in the financial performance can be accounted for by the auditor's independence. Firm Size increased the R2 to 0.714 an indication that it is a significant moderator on the relation between internal audit independence and performance. For each one-unit rise in Sacco size, the impact of Auditor's Independence on financial performance increases by 0.222 units substantially (P=0.000). The study concluded that Sacco size has a significant moderator in this study. The study recommended that Saccos should tailor their strategies and internal audit processes based on their size. Larger Saccos may benefit from more robust auditor independence measures and closer scrutiny of financial performance indicators. [ABSTRACT FROM AUTHOR]

This study aims to determine and analyze the effect of competence, integrity, independence, objectivity, on audit quality with risk-based audit moderation variables at the Kuningan Regency Inspectorate. This research is quantitative research. The data used is primary data with a data collection method in the form of a questionnaire. The research data was processed using the IBM SPSS Statistics 26 program with a sample of 53 respondents. The results showed that auditor competence had no significant effect on audit quality. Meanwhile, auditor integrity, auditor independence and auditor objectivity have a significant effect on audit quality. Risk-based audit moderation variables are unable to moderate auditor competence, auditor integrity, auditor independence and auditor objectivity on audit quality. [ABSTRACT FROM AUTHOR]

Purpose: The purpose of this study is to investigate the association between nonaudit services (NAS) and out-of-period adjustments (OOPAs). Over the years, the number of OOPAs has risen while the number of restatements has decreased. This could indicate an improvement in financial reporting quality. It could also indicate the use of a type of stealth restatement for opportunistic purposes. These less prominent restatements are more likely to go undetected and could perpetuate opportunistic disclosure and mitigate the likelihood of unfavorable market reactions. Design/methodology/approach: The authors use a two-stage multivariate regression analysis to examine the relationship between NAS and the reporting of an OOPA. The authors use prior research on NAS to guide the model development. The authors perform several robustness checks including different types of NAS and different characteristics of OOPAs. Findings: The results indicate that NAS has a significantly negative association with the existence of OOPAs. The core findings suggest that NAS does not impair auditor independence. Rather, greater amounts of NAS may contribute to knowledge spillover, which leads to higher financial reporting and audit quality. The results are robust to several additional tests. Research limitations/implications: The results raise interesting implications for regulators, executives, auditors, investors and future research. The authors provide insight into the relationship between NAS and auditor independence. Originality/value: To the best of the authors' knowledge, prior research has not considered the effect of NAS on OOPAs. The authors contribute to the literature by providing evidence that OOPAs, a form of stealth restatements, is an important consideration in audit quality research. [ABSTRACT FROM AUTHOR]

I develop a model that provides new insights into the consequences of the provision of non-audit services (NAS) by audit firms to audit clients. I also investigate the joint implications of NAS and contingent audit fees (CAF) for audit quality. In the model, litigation and reputation costs do not provide sufficient incentives to auditors to exert audit effort. Investors of client firms may therefore let auditors provide NAS because of an incentive effect. Indeed, the possibility of providing NAS contingent on detecting financial misstatements increases auditors' incentives to exert audit effort. However, the provision of NAS also reduces auditor independence, which may decrease audit quality and in turn render the provision of NAS by auditors undesirable. Thus my analysis uncovers an interesting tradeoff for regulators between the positive incentive effect and the decrease in auditor independence. Removing the current restrictions on CAF may offset the ex post decrease in audit quality while preserving the ex ante incentives. My analysis also generates a number of testable empirical predictions. [ABSTRACT FROM AUTHOR]

The article examines the effectiveness of simplification of the regulatory framework relying on American Institute of Certified Public Accountants (AICPA) rules in assessing auditor independence, as opposed to harmonization with the standards set by the Securities and Exchange Commission and the Public Company Accounting Oversight Board. It explains how the structure of public company audits may affect auditor independence. It describes a self-regulatory model for auditor regulation.

Our study explores the effects of statutory auditor's independence on value relevance, measuring the different impact against the quality of country-level investor's protection and firm-level corporate governance. A sample of 98 European financial entities listed on the stock markets of 15 countries in the period from 2009 to 2014 is used to measure statutory auditor independence by taking into account audit firm tenure, partner tenure, and the percentage of nonaudit fees. Findings demonstrate that in different investor protection environments or in the presence of differences in corporate governance quality, phenomena that could be interpreted as a deterioration of the auditor independence do not necessarily determine a decrease in the value relevance of accounting numbers. Rather, they may determine a possible increase if the knowledge spillover effects prevail over the perception that independence has deteriorated. These findings add to the literature and provide regulators with insights by suggesting that not only accounting and auditing practices but also country features or firm-level corporate governance quality might influence the outcome of reforms on the independence of the statutory auditor as well as value relevance judgments. [ABSTRACT FROM AUTHOR]

Copyright of Contemporary Accounting Research is the property of Canadian Academic Accounting Association and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

The level of audit regulation has seen an accelerating dynamic in recent years, with the issue of auditor independence increasingly highlighted in the regulations. In Romania, at the level of public institutions, there are, according to the latest reports, vulnerabilities in terms of transparency and the level of cooperation with auditors, manifested by the issuance of qualified audit reports on the basis of events such as the lack of inventory or transparency in the provision of information for audit (failure to issue the audit report). In this context, we proposed to carry out an impact study on the behavior of the statutory auditor in the context of specific regulations and to develop an auditor independence model. The used methods used consist of literature review, econometric modelling and critical impact analysis. The results of the study will highlight the vulnerabilities induced by the level of auditor turnover on the economic performance of public institutions and are useful to decision makers in order to optimize audit practices.

This article examines the relationship between professional ethics, independence, and audit expertise on auditor performance in government organizations. The study focuses on the Financial and Development Supervisory Agency (BPKP) as the internal auditing firm. The research findings indicate that all three factors have a significant impact on auditor performance. Professional ethics and independence contribute to higher quality auditing, while audit expertise improves accuracy and effectiveness. The article emphasizes the importance of adhering to ethical standards, maintaining independence, and continuously developing audit skills for optimal performance. [Extracted from the article]

Debate over public‐sector auditors' independence has focused largely on Western developed democracies. Drawing on Gramsci's theory of hegemony, this study explores how the political hegemony and ideology influence public‐sector auditors' independence and audit quality in a developing country, Indonesia. In contrast to the widely accepted belief that public‐sector auditors' independence is guaranteed by the legislature, this study argues that active intervention by the political hegemony undermines this independence and thus impairs audit quality. The study's document analysis and in‐depth interviews conducted with technical controllers, supervisors and investigators at the Supreme Audit Institution in Indonesia reveal that the political hegemony and ideology influence auditors' cognition. This study enhances understanding of how the political hegemony, supported by the imperium, ruling‐class psychology and spheres of influence, substantially erodes auditors' constitutive role, giving rise to concerns about value for taxpayers' money and public‐sector effectiveness and efficiency. [ABSTRACT FROM AUTHOR]

The EU has faced the moral hazard problem of auditors by protecting their independence in two ways, with the formulation of a general principle of independence, and with the implementation of a preventive and sanctioning framework of safeguards and incompatibilities. The latest EU Directive, which reformed the auditing profession, adopted and extended such measures. This research fills a gap in the literature by showing the perception auditors have of the benefits of this new regulatory framework to promote auditor independence. With this purpose, we developed a qualitative study using a questionnaire addressed to a sample of 192 auditors. Following structural equation modelling methodology (SEM), we obtained results showing that the new and more restrictive European regulation of personal and service incompatibilities has a positive effect and improves the perceived independence of auditors. [ABSTRACT FROM AUTHOR]

Copyright of Contemporary Accounting Research is the property of Canadian Academic Accounting Association and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

We focus on the first year of the auditor–client relationship and investigate whether audit quality varies with the timing of the new auditor's appointment. We find that audit quality is not lower for companies that engage new auditors before the end of the third fiscal quarter than for companies that do not change auditors. However, companies that engage new auditors during or after the fourth fiscal quarter are more likely to misstate their audited financial statements than companies that engage new auditors earlier in the year and companies that do not change auditors. In additional tests, we find that the decrease in audit quality associated with late auditor changes is more pronounced for companies with complex operations (i.e., more operating segments). These results suggest that the extent to which audit quality suffers in the first year of audit engagements is affected by both the amount of time required to understand the client's business, assess risks, and perform the audit (all of which are driven by client complexity), as well as the amount of time available for auditors to perform these tasks. [ABSTRACT FROM AUTHOR]

We examine the association between abnormal audit fees and audit quality using Australian data. We find that audit quality, measured by auditors' propensity to issue going concern opinions for financially distressed companies, discretionary accruals, and clients' propensity to meet or beat earnings benchmarks, declines as positive abnormal audit fees increase in magnitude. Our findings support an economic bonding argument that positive abnormal audit fees reflect the extent of economic bonding between the auditor and the client. We also find that negative abnormal audit fees are negatively associated with the absolute value of discretionary accruals. Our findings suggest that academic researchers, practitioners, regulators, and others interested in assessing the effect of auditor remuneration on auditor independence and audit quality should be concerned with audit fees that are above a normal level rather than audit fees that are below a normal level of audit fees. JEL Classification: M42, M49 [ABSTRACT FROM AUTHOR]

Non-audit services (NAS) are of vital importance in the auditing profession. However, the diverse field of NAS suffers from a lack of research that particularly offer evidence for discerning the factors affecting non-audit fees (NAF). The purpose of this study is to fill this lacuna in the existing literature. The study is built on a systematic literature review (SLR) approach combined with bibliometric analysis. Additionally, a scoring model has been used to create a standard model that includes the key NAF drivers. A final corpus of 76 items of literature on NAF for the period 1981-2023 was retrieved systematically for the review. According to the study, there has been a consistent upward trend in NAF publications, with the United States leading the way. The analysis also aids in the identification of seventeen significant factors that affect NAF in accordance with the three distinct categories of auditor specific, auditee specific and engagement specific. The findings of this study may help regulatory agencies ensure greater oversight on the provision of non-audit services by supplying evidence on the variables influencing the NAF. While previous reviews have been undertaken employing many qualitative methodologies, this research seeks to use both qualitative and quantitative methods - which is uncommon - to synthesize the body of existing knowledge. [ABSTRACT FROM AUTHOR]

Auditing is an examination that is carried out critically and systematically. Where the party that performs is independent of the financial statements that have been prepared by management as well as bookkeeping records and supporting evidence. Auditing can be regarded as a systematic process for objectively gathering and evaluating evidence about assertions about various economic actions or events to determine the degree of correspondence between these assertions. Audit is a process carried out by an auditor to obtain accurate evidence regarding the economic activity of an entity, this audit process will be carried out to equalize the degree of fairness of an entity's economic activity whether it is in accordance with what has been determined and report the results to interested parties. Public accountants who carry out auditing activities work not only for the benefit of the client but also for other parties who use the audit report. This study aims to determine how much influence auditor objectivity, auditor independence, auditor knowledge, auditor work experience and auditor professional integrity have on the quality of auditor work at Public Accounting Offices throughout the City of Bandung. The method used in this study uses quantitative methods using primary data. The sampling technique used is probability sampling. The research data is taken from statements according to auditors who work at Public Accounting Offices throughout the City of Bandung. This study aims to determine the influence of objectivity, independence, knowledge, work experience and professional integrity on the quality of the work of auditors in Public Accounting Offices throughout the City of Bandung. [ABSTRACT FROM AUTHOR]

Independence is widely regarded as one of the key principles of effective auditing. This article explores the understanding of the nature of auditor independence at the level of practice in the public sector using the case study of Indonesia's Supreme Audit Institution (Badan Pemeriksa Keuangan-Republik Indonesia – BPK-RI). The research uses a case study methodology involving in-depth interviews with a stratified sample comprised of four groups of BPK-RI auditors. The results confirm that independence is perceived by all respondents as a fundamental auditor value. Independence was found to be a multifaceted concept which was perceived by respondents to have personal, professional and organisational aspects. However, depending on one's location in the organisational hierarchy there are different emphases about the relative importance of the different aspects of auditor independence. [ABSTRACT FROM AUTHOR]

We investigate whether audit partner level data provides a more powerful measure than office or firm level measures of client importance. We find that the likelihood of issuing a going‐concern opinion (any and first‐time) increases, and the absolute value of discretionary accruals decreases, in relation to the proportion of audit fees to the total audit fees received by audit partners from all their clients. We also find that the likelihood of issuing a going‐concern opinion (any and first‐time) increases, and the absolute value of discretionary accruals decreases, in relation to the proportion of non‐audit services fees from a client to total non‐audit service fees, and the proportion of total audit and non‐audit service fees from a client to total fees from all their clients at the office and firm levels. Our findings provide evidence to regulators, audit clients, and stakeholders that audit partners do not succumb to pressure from economically more important clients as audit quality has a positive association with client importance. [ABSTRACT FROM AUTHOR]

SYNOPSIS: This is a study of the first nine years of Arthur Andersen & Co.'s Public Review Board (PRB), from 1974 to 1983, coinciding with the term of its first chairman, Newton N. Minow. The PRB was a unique experiment, as the Andersen firm established it as an independent board composed of distinguished public servants who were to review the firm's policies and make visits to the firm's offices around the world and then render annual reports on their assessment of the quality of the firm's work in carrying out its professional practice, in auditing, tax, and administrative services. The PRB's annual reports were to be published. The paper concludes with a discussion of some lessons that might be learned from the PRB experience in today's debates over the regulation of audit firms and the management of audit quality. Data Availability: PRB annual reports are held by the AICPA Library. [ABSTRACT FROM AUTHOR]

The purpose of the paper is to create a bibliometric analysis of studies published in the Web of Science database on audit rotation (AR). In order to capture the effects of the EU audit reform on this topic, the period analysed has been divided in two intervals, 2007 – 2013 and 2014 – 2020. It has been determined that academic research on AR has increased significantly after the adoption of the EU reform. Improving audit quality is a common purpose of all parties in the corporate reporting ecosystem. However, there is no unanimously accepted opinion if the auditor rotation improves the audit quality or not.

This paper investigates the role of structural ownership reforms in sustaining auditor independence through split-share structure reform (SSSR). Studying a sample of 1826 Chinese listed firms over the SSSR period in China, the results showed that auditor independence sustainability was less pronounced in local state-owned enterprises (LSOEs) compared with non-state-owned Enterprises (NSOEs). Nevertheless, after the SSSR, there is a significant enhancement in sustaining auditor independence. In particular, auditor independence sustainability is pronounced by providing an unqualified audit opinion, including an 'emphasis of matter paragraph' instead of issuing a modified audit opinion. This study contributes to the literature in two ways. First, it gives an empirical investigation into auditor independence sustainability efforts by the Chinese government through the SSSR. Second, it helps regulators and policy-makers in China and other emerging markets in evaluating the SSSR efforts to improve auditor independence. [ABSTRACT FROM AUTHOR]

This paper explores the practices of auditors in a non-Western cultural environment. Drawing on Alasdair MacIntyre's virtue ethics framework and narrative interviews with twenty Tunisian auditors, we investigate how auditors reconcile their duty to independence with the expectations of a kinship economy. Additionally, we explore how institutions—such as professional oversight bodies—play into this reconciliation. We find that, although auditors may pursue a telos at odds with international auditing standards, the purpose that these auditors serve is congruent with their moral tradition. That is, rather than positioning themselves as objective arbiters of financial reporting, these auditors position themselves as guardians of their auditees. While this revised position engenders conduct that may appear to violate their independence, our auditors' practices are congruent with the virtues of justice, courage, and honesty, as they conceive of them in the context of a Tunisian moral tradition. This study makes two main contributions to the literature. First, we provide empirical evidence into the ways in which auditors redefine independence in the context of a kinship economy. Second, we demonstrate that, when auditing local firms, auditors apply a version of professionalism that emphasizes community-oriented care over objectivity. [ABSTRACT FROM AUTHOR]

In this study, we provide empirical evidence on how the relationship between industry specialist auditors and real earnings management (REM) is moderated by the auditors’ independence. From a sample of Malaysian listed companies for the period 2009 to 2016, the results indicate that companies with specialist auditors are less likely to practise REM. However, this negative association is less pronounced when the independence of the specialist auditor is low, suggesting that the presence of economic bonding between the specialist auditor and the client may allow the auditor to become sufficiently lax to align with the interests of an economically important auditee. Our findings remain robust after controlling for endogeneity and self-selection bias and performing several further analyses. This study is the first to prove that auditor independence can moderate the effectiveness of industry specialist auditors in mitigating REM practices. The results have implications for policy makers to enhance the current regulation structure of auditing and accounting professions. The results also provide new insights into the association between audit quality, REM and auditor independence in an emerging economy.

Abstract This study aims to synthesize the development of empirical research on factors that affect auditor independence. This systematic literature review includes articles published in international journals indexed by Scopus between 2001 and 2021. The results show that this topic was published the most in 2009, with a total of 5 articles. Research on auditor independence is led by authors from America (48%), Australia (17%), and United Kingdom (17%). Quantitative approaches dominate the research methodology applied. The Auditing: A Journal of Practice & Theory has largest distribution of publications (29%). In various prior studies, the development of empirical research on the factors that influence auditor independence remains inconsistent, allowing for re-testing in the future. Abstrak Penelitian ini bertujuan untuk mengurai dan mensintesiskan perkembangan penelitian empiris faktor-faktor yang mempengaruhi independensi auditor. Systematic literature review ini menganalisis artikel yang terbit di jurnal internasional terindeks scopus dari 2001 hingga 2021. Hasil penelitian menunjukkan bahwa publikasi artikel terbanyak adalah pada tahun 2009 dengan jumlah 5 publikasi. Penelitian tentang independensi auditor didominasi oleh penulis yang berasal dari Amerika (48%), Australia (17%), dan Inggris (17%).Dari sisi metode, penelitian lebih didominasi oleh pendekatan kuantitatif. Sementara itu, distribusi publikasi terbanyak terdapat pada jurnal Auditing: A Journal of Practice & Theory (29%). Perkembangan hasil penelitian empiris terkait faktor-faktor yang mempengaruhi independensi auditor masih tidak konsisten pada beberapa penelitian terdahulu sehingga memungkinkan untuk dilakukan pengujian kembali di masa yang akan datang.

Purpose: Litigation against auditors has augmented as the number of corporate failures increased over the past decades. A failure to exercise professional scepticism has been cited as one of the main contributing factors to audit failure. This research establishes a link between professional scepticism and emotional intelligence (EI). Credence is given to the design of interventions promoting the development of auditor EI with the view of combating the incidence of audit failure. Design/methodology/approach: A sample of United States (US) judicial opinions was examined where professional scepticism of auditors was considered. A dual coding system was applied where process elements of professional scepticism and components of emotional intelligence were identified and linked. Findings/results: A significant overlap between elements of professional scepticism and facets of emotional intelligence was indicated, especially those of self-assessment, conscientiousness, organisational awareness, communication skills, leadership and managing influence. Practical implications: Emotional intelligence competencies become part of the resources available to the auditor, which may be used to exercise their professional scepticism. Interventions designed to enhance auditor emotional intelligence may positively impact the levels of professional scepticism demonstrated, ultimately aiding in lowering the incidence of audit failure. Originality/value: This research offers a new process perspective of professional scepticism which has been adapted from the works of seminal authors in the field. Using the data sample, the incidences of overlap between emotional intelligence and the process steps of professional scepticism are identified and categorised within this framework. This research contributes to the body of empirical research on emotional intelligence in the auditing field.

The paper aims to highlight the importance that the elements regarding the ethics of external public auditors have in auditing public sector entities, respectively, in providing audit reports that contribute, through the recommendations contained, to the management, in conditions of efficiency, effectiveness and economy of public funds. Compliance with ethical principles by public auditors also helps to increase the quality of audit reports, reducing noncompliance, including fraud, and increasing the company's confidence in this sector. For this study, the methodology used is the qualitative one, in which the most relevant and current articles have been systematized that deal with the role of ethical elements in terms of external public auditors, respectively ethical elements specific to the Supreme Audit Institutions (IAS) of various countries of the world. Following the analysis, several factors have been identified that impact the results and quality of audit reports prepared as a result of the audits performed, which were used to highlight the importance of respecting ethical elements by public auditors in different countries. The most relevant factors are the auditor's independence, the level of training of the auditor, professional scepticism, creating an ethical climate appropriate to the professional activity following the aims and mission of the institution, preventing and resolving ethical issues and conflicts, discouraging unethical practices, etc. The main conclusion is that several ethical factors influence the quality of audits performed in the public sector. However, auditors' independence is undoubtedly one factor with a high impact on the qualitative aspects of audits in this sector. [ABSTRACT FROM AUTHOR]

The level of audit regulation has seen an accelerating dynamic in recent years, with the issue of auditor independence increasingly highlighted in the regulations. In Romania, at the level of public institutions, there are, according to the latest reports, vulnerabilities in terms of transparency and the level of cooperation with auditors, manifested by the issuance of qualified audit reports on the basis of events such as the lack of inventory or transparency in the provision of information for audit (failure to issue the audit report). In this context, we proposed to carry out an impact study on the behavior of the statutory auditor in the context of specific regulations and to develop an auditor independence model. The used methods used consist of literature review, econometric modelling and critical impact analysis. The results of the study will highlight the vulnerabilities induced by the level of auditor turnover on the economic performance of public institutions and are useful to decision makers in order to optimize audit practices. [ABSTRACT FROM AUTHOR]

Purpose – The study examines the relationship between nonaudit services (NAS) and accruals quality in Malaysia. The study also considers several important characteristics of audit committee as the determinant for accruals quality. Next, the study examines whether these characteristics mitigate the relationship between NAS and accruals quality. Design/methodology/approach – The study employs descriptive analysis, univariate tests and multivariate regression to investigate the potential effect of NAS on acruals quality. Data for audit committee characteristics were hand collected from annual reports downloaded from Bursa Malaysia's website. Findings – Based on 1,118 firm-year observations for the period 2009–2011, the study finds that NAS negatively impact accruals quality. This empirical result indicates that the economic bond that is created between auditors and clients restricts the auditors from performing their duty objectively. A fully independent audit committee weakens the negative relationship between NAS and auditor independence. Research limitations/implications – The sample period represents a limitation since it only covers three years of data. This limitation is largely driven by the nature of data collection of NAS fees. Practical implications – These results contribute to Malaysia's policy deliberation to account for the effects of NAS on auditor independence and the oversight role of an audit committee. This study contributes to theoretical perspectives on accruals quality and corporate governance in Malaysia. Originality/value – The novelty of this research, coupled with institutional data in Malaysia, claims the originality of this research.